Saturday, November 22, 2014


Ukraine

In Kyiv, One Businessman's Fight Back Against Yanukovych's Thuggery

Yaroslav Pidgaynyi sits behind his desk in his office for the first time since he was chased out by corporate raiders.
Yaroslav Pidgaynyi sits behind his desk in his office for the first time since he was chased out by corporate raiders.

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KYIV -- Yaroslav Pidgaynyi grinned with disbelief as he set foot back in his office for the first time since he was chased out onto the street 10 months ago by a group of men who seized control of the major urban architecture firm where he is director.

Last September, a gang alleged to have ties to Artyom Pshonka, the son of Viktor Yanukovych’s --- now fugitive – prosecutor-general, took control of the sprawling Soviet-era "Kyiv Project" building, an architecture and engineering hub for millions of dollars in construction in the capital every year. 

They then gained full control of Kyiv Project by illegally electing and appointing their man as director. And when Pidgaynyi and two stakeholders appealed to the police, they themselves were targeted with criminal investigations and went on the run. 

As Pidgaynyi returned to his office on June 18, thanking civil society for its support, activists hailed a small victory over a hated phenomenon that had boomed under former President Yanukovych: the practice of corporate "raids," whereby businesses are stolen by criminal groups acting with the protection of high-level contacts. 

"This is a historic moment," Pidgayni said in a brief speech to rolling cameras in his office. "Justice has been done and hopefully we can bring an end to lawlessness, which unfortunately is still present."

Outcry over incursions into private business and enterprise -- known simply as “raiding” in post-Soviet parlance -- resonated in chants like “Out with the gang” at the Euromaidan mass antigovernment protests in Kyiv this past winter. Pidgaynyi's case will be watched keenly by others seeking a return of seized property.

"[We are now seeing] the return of what was taken away,” said Andryi Semididko, head of the Anti-Raiding Union of Ukrainian Entrepreneurs, who said 7,000 businesses were illegally seized in the three years of Yanukovych’s reign. “This is the return of what was ‘squeezed out,' as they say, under Yanukovych through criminal investigations against managers or the physical seizure of property."

Semididko’s anti-raiding outfit has already helped reverse five such takeovers since Yanukovych fled the country in February. But it has not been easy by any stretch. 

Legislation

After Yanukovych's ouster, the stand-in authorities were quick to be seen addressing the problem of corporate raiding. On March 19, then acting President Oleksandr Turchynov signed an anti-raiding decree and set up a working group.  

Semididko was critical of the chairman of the working group and said it has only met once since it was formed. He expressed hope that new President Petro Poroshenko, himself a businessman, would address the problem of corporate raiding. However, he noted that the mood in society has transformed since Euromaidan and that there have been no old-school corporate takeovers he is aware of.  

"There have been some little ones, but they are extinguished quickly by self-defense brigades," he says. "A sense of justice has awoken in people. Bureaucrats have started to be scared. Judges are scared as well because 10 people might come and set tires on fire or drag a prosecutor by the tie. It's gone quiet -- the raiders have gone quiet. People have the right to ask now -- and ask of everyone."

"Raiding" thrived under Yanukovych"Raiding" thrived under Yanukovych
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"Raiding" thrived under Yanukovych
"Raiding" thrived under Yanukovych

But the twists and turns of Pidgaynyi's odyssey to retrieve his old life demonstrate the difficulty that lies ahead in unpicking the injustices of the Yanukovych tenure. 

“It’s been war for months,” said Oleksandr Tumarkin, who represents Kyiv Project’s majority shareholders. 

Once the ruling elite fled the country in late February -- in Pshonka’s case somewhat dramatically -- Pidgaynyi and shareholders went to court to turn their lives around. After several hearings, Pidgaynyi was recognized as the legal director by the beginning of April.

Rented Out To Right Sector

But someone was still pulling strings. Pidgaynyi was temporarily blocked from signing onto the State Registry as director. The police, moreover, continued to summon him for questioning. In the meantime, the guards in the Kyiv Project building just a few hundred meters from the Euromaidan encampment would not allow him in. 

And, in what appears to have been a flourish of creativity, the corporate raiders then rented out floor space to Ukraine’s most authoritative brand: the ultranationalist “Right Sector” group. The upshot was that meter-long red-and- black Right Sector banners appeared on the facade of the building giving the impression Right Sector had given their seal of approval to the takeover. 

Pidgaynyi resorted to an information campaign of press conferences, while shareholders wrote open letters to Poroshenko and Kyiv's new mayor, Vitaly Klitschko. Finally, on June 18, accompanied by crews from local television stations, Pidgaynyi and activists approached the guards who at first tried to stop them entering. 

Confronted by rolling video cameras, smirking journalists, and the self-assured voices of plaintiffs and activists, the guards became sheepish and shrank away to make a phone call, letting Pidgaynyi and entourage through and upstairs to his office. The wood-paneled office was intact, and no one was inside, although the television was still running. 

The criminal cases against the two shareholders have been dropped, while Pidgaynyi's case is yet to be formally closed, according to Semididko. The challenge now is to tote up the losses incurred. Pidgaynyi has said archives of engineering and architectural plans that date back decades into the Soviet period were being sold off.
 
Alluding to the country’s national poet, Pidgaynyi was thankful to civil society for supporting him. “As [Taras] Shevchenko said, if we put all our grain together, we will be victorious. What is happening now has a positive influence for the development of the country, the city, and its people.”

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